Oregon Senate passes bill to eliminate taxes on wildfire lawsuit awards: What to know

The Oregon Senate Wednesday voted unanimously to pass a bill that would allow wildfire survivors who receive a court award or settlement to keep more of their money.

Senate Bill 1520, sponsored by Sen. Brian Boquist, I-Dallas, creates a tax exemption for awards stemming from lawsuits related to wildfires.

The bill now heads to the House.

Multiple lawsuits have resulted in millions in settlements and awards to survivors over the past year, primarily from legal action against PacifiCorp, which a jury found at fault for igniting four of the 2020 Labor Day wildfires — Santiam/Beachie, Echo Mountain Complex, 242 and South Obenchain.

The problem? Tax laws create a situation where survivors only receive a small amount of the payout — as little as 20-30%, according to a lawyer who helped negotiate a $299 million settlement for survivors of the Archie Creek Fire in southern Oregon.

By creating the exemption, survivors should get to keep more of their money.

“There shall be subtracted from federal taxable income any amount received in judgment or settlement resulting from a civil action arising from wildfire, as defined in ORS 477.089, and awarded to a plaintiff,” the bill states.

The legislation would apply to state taxes, Boquist said. There is currently a bill in Congress to exempt awards from federal taxes as well.

Unlike a previous version of the bill, the legislation would now apply to both settlement and jury awards.

“(This bill) is the result of a yearlong bipartisan effort to give wildfire victims financial relief needed rebuild their homes and get their lives back on track,” Boquist said. “Now that many victims of recent wildfires have received their settlements from PacifiCorp, they want to begin the process of rebuilding. However, they often can’t because they owe roughly 45% of their net settlement to the state and federal government in taxes. The tax relief provided in this bill means many of these wildfire victims will have the ability to begin rebuilding their homes, businesses, and communities.”

The law would apply to wildfire survivors in the Santiam Canyon and Lincoln City area that are part of a class action lawsuit against PacifiCorp. So far, juries have awarded $175 million to 26 plaintiffs impacted by the Santiam, Echo Mountain, South Obenchain and 242 fires. However, there are a total of roughly 5,000 fire survivors who could ultimately earn an award from the lawsuit.

“It is critical that we ease the burden of Oregonians who have already suffered immense loss to catastrophic wildfire in recent years,” Sen. Lynn Findley, R-Vale, a chief sponsor of the bill, said in a statement.

Zach Urness has been an outdoors reporter in Oregon for 15 years and is host of the Explore Oregon Podcast. Urness is the author of “Best Hikes with Kids: Oregon” and “Hiking Southern Oregon.” He can be reached at zurness@StatesmanJournal.com or (503) 399-6801. Find him on Twitter at @ZachsORoutdoors.

This article originally appeared on Salem Statesman Journal: Oregon bill advances to eliminate tax on wildfire lawsuit awards